Building Blocks

Key Protocol Addresses (Verified Mar 2026)

See addresses/SKILL.md for complete multi-chain address list including L2-native protocols (Aerodrome, GMX, Pendle, Velodrome, Camelot, SyncSwap, Morpho).

Uniswap V4 Hooks (New)

Hooks let you add custom logic that runs before/after swaps, liquidity changes, and donations. This is the biggest composability upgrade since flash loans.

Hook Interface (Solidity)

import {BaseHook} from "v4-periphery/src/utils/BaseHook.sol";
import {IPoolManager} from "v4-core/interfaces/IPoolManager.sol";
import {PoolKey} from "v4-core/types/PoolKey.sol";
import {BeforeSwapDelta, BeforeSwapDeltaLibrary} from "v4-core/types/BeforeSwapDelta.sol";

contract DynamicFeeHook is BaseHook {
    constructor(IPoolManager _manager) BaseHook(_manager) {}

    function getHookPermissions() public pure override returns (Hooks.Permissions memory) {
        return Hooks.Permissions({
            beforeInitialize: false,
            afterInitialize: false,
            beforeAddLiquidity: false,
            afterAddLiquidity: false,
            beforeRemoveLiquidity: false,
            afterRemoveLiquidity: false,
            beforeSwap: true,           // ← We hook here
            afterSwap: false,
            beforeDonate: false,
            afterDonate: false,
            beforeSwapReturnDelta: false,
            afterSwapReturnDelta: false,
            afterAddLiquidityReturnDelta: false,
            afterRemoveLiquidityReturnDelta: false
        });
    }

    // Dynamic fee: higher fee during high-volume periods
    function beforeSwap(
        address,
        PoolKey calldata key,
        IPoolManager.SwapParams calldata params,
        bytes calldata
    ) external override returns (bytes4, BeforeSwapDelta, uint24) {
        // Return dynamic fee override (e.g., 0.05% normally, 0.30% during volatility)
        uint24 fee = _isHighVolatility() ? 3000 : 500;
        return (this.beforeSwap.selector, BeforeSwapDeltaLibrary.ZERO_DELTA, fee | 0x800000);
    }
}

Hook use cases with real code patterns:

• Dynamic fees — adjust based on volatility, time-of-day, or oracle data
• TWAMM — split large orders over time to reduce price impact
• Limit orders — execute when price crosses a threshold
• MEV protection — auction swap ordering rights to searchers
• Custom oracles — TWAP updated on every swap

Composability Patterns (Updated for 2026 Gas)

These patterns are now economically viable even for small amounts due to sub-dollar gas:

Flash Loan Arbitrage

Borrow from Aave → swap on Uniswap for profit → repay Aave. All in one transaction. If unprofitable, reverts (lose only gas: ~$0.05-0.50).

Leveraged Yield Farming

Deposit ETH on Aave → borrow stablecoin → swap for more ETH → deposit again → repeat. Gas cost per loop: ~$0.02 on mainnet, negligible on L2.

Meta-Aggregation

Route swaps across multiple DEXs for best execution. 1inch and Paraswap check Uniswap, Curve, Sushi simultaneously.

ERC-4626 Yield Vaults

Standard vault interface — the "ERC-20 of yield." Every vault exposes the same functions regardless of strategy.

import {ERC4626} from "@openzeppelin/contracts/token/ERC20/extensions/ERC4626.sol";
import {ERC20, IERC20} from "@openzeppelin/contracts/token/ERC20/ERC20.sol";

contract SimpleYieldVault is ERC4626 {
    constructor(IERC20 asset_) 
        ERC4626(asset_) 
        ERC20("Vault Shares", "vSHARE") 
    {}

    // totalAssets() drives the share price
    // As yield accrues, totalAssets grows → shares worth more
    function totalAssets() public view override returns (uint256) {
        return IERC20(asset()).balanceOf(address(this)) + _getAccruedYield();
    }
}

// Usage: deposit/withdraw are standardized
// vault.deposit(1000e6, msg.sender);  // deposit 1000 USDC, get shares
// vault.redeem(shares, msg.sender, msg.sender);  // burn shares, get USDC back
// vault.convertToAssets(shares);  // how much USDC are my shares worth?

Why ERC-4626 matters: Composability. Any protocol can integrate any vault without custom adapters. Yearn V3, Aave's wrapped tokens, Morpho vaults, Pendle yield tokens — all ERC-4626.

Flash Loan (Aave V3 — Complete Pattern)

import {FlashLoanSimpleReceiverBase} from 
    "@aave/v3-core/contracts/flashloan-v3/base/FlashLoanSimpleReceiverBase.sol";
import {IPoolAddressesProvider} from 
    "@aave/v3-core/contracts/interfaces/IPoolAddressesProvider.sol";

contract FlashLoanArb is FlashLoanSimpleReceiverBase {
    constructor(IPoolAddressesProvider provider) 
        FlashLoanSimpleReceiverBase(provider) {}

    function executeArb(address token, uint256 amount) external {
        // Borrow `amount` of `token` — must repay + 0.05% fee in same tx
        POOL.flashLoanSimple(address(this), token, amount, "", 0);
    }

    function executeOperation(
        address asset,
        uint256 amount,
        uint256 premium,  // 0.05% fee
        address,
        bytes calldata
    ) external override returns (bool) {
        // --- Your arbitrage logic here ---
        // Buy cheap on DEX A, sell expensive on DEX B
        // Must end with at least `amount + premium` of `asset`
        
        uint256 owed = amount + premium;
        IERC20(asset).approve(address(POOL), owed);
        return true;  // If unprofitable, revert here — lose only gas (~$0.05-0.50)
    }
}

Aave V3 Pool (mainnet): 0x87870Bca3F3fD6335C3F4ce8392D69350B4fA4E2 Flash loan fee: 0.05% (5 basis points). Free if you repay to an Aave debt position.

Building on Base

Dominant DEX: Aero (formerly Aerodrome, ~$500-600M TVL) — NOT Uniswap. In November 2025, Dromos Labs merged Aerodrome (Base) and Velodrome (Optimism) into a unified cross-chain DEX called Aero. Same contracts, same ve(3,3) model, new brand.

How Aero Works (Critical Difference from Uniswap)

• LPs deposit tokens into pools → earn AERO emissions (not trading fees!)
• veAERO voters lock AERO → vote on which pools get emissions → earn 100% of trading fees + bribes
• This is the opposite of Uniswap where LPs earn fees directly
• Flywheel: Pools generating most fees → attract most votes → get most emissions → attract more LPs → deeper liquidity → more fees

Aerodrome Swap (Router Interface)

// Aerodrome Router: 0xcF77a3Ba9A5CA399B7c97c74d54e5b1Beb874E43 (Base)
struct Route {
    address from;
    address to;
    bool stable;       // true = stable pair (like Curve), false = volatile (like Uni V2)
    address factory;   // 0x420DD381b31aEf6683db6B902084cB0FFECe40Da
}

// Swap via Router
function swapExactTokensForTokens(
    uint256 amountIn,
    uint256 amountOutMin,
    Route[] calldata routes,
    address to,
    uint256 deadline
) external returns (uint256[] memory amounts);

Base-Specific Patterns

• Coinbase Smart Wallet — ERC-4337 wallet, passkey auth, gasless txs via Coinbase paymaster
• Farcaster Frames v2 — mini-apps embedded in social posts that trigger onchain actions
• AgentKit — Coinbase's framework for AI agents to interact onchain

Building on Arbitrum (Highest DeFi Liquidity)

GMX V2 — How GM Pools Work

• Each market has its own isolated pool (unlike V1's single GLP pool)
• LPs deposit into GM (liquidity) pools → receive GM tokens
• Fully Backed markets: ETH/USD backed by ETH + USDC. Backing tokens match the traded asset.
• Synthetic markets: DOGE/USD backed by ETH + USDC. Uses ADL (Auto-Deleveraging) when thresholds are reached.
• LPs earn: trading fees, liquidation fees, borrowing fees, swap fees. But bear risk from trader PnL.

Pendle — Yield Tokenization

Pendle splits yield-bearing assets into principal and yield components:

1. SY (Standardized Yield): Wraps any yield-bearing asset. E.g., wstETH → SY-wstETH.
2. PT (Principal Token): The principal. Redeemable 1:1 at maturity. Trades at a discount (discount = implied yield).
3. YT (Yield Token): All yield until maturity. Value decays to 0 at maturity.
4. Core invariant: SY_value = PT_value + YT_value

Use cases:

• Buy PT at discount = lock in fixed yield (like a zero-coupon bond)
• Buy YT = leverage your yield exposure (bet yield goes up)
• LP in Pendle pools = earn trading fees + PENDLE incentives

Arbitrum-Specific Tech

• Stylus: Write smart contracts in Rust/C++/WASM alongside EVM (10-100x gas savings for compute-heavy operations)
• Orbit: Launch custom L3 chains (47 live on mainnet)

See addresses/SKILL.md for all verified protocol addresses (GMX, Pendle, Camelot, Aerodrome, Velodrome, SyncSwap, Morpho).

Discovery Resources

• DeFi Llama: https://defillama.com — TVL rankings, yield rankings, all chains
• Dune Analytics: https://dune.com — query onchain data
• ethereum.org/en/dapps/ — curated list

Guardrails for Composability

• Every protocol you compose with is a dependency. If Aave gets hacked, your vault depending on Aave is affected.
• Oracle manipulation = exploits. Verify oracle sources.
• Impermanent loss is real for AMM LPs. Quantify it before providing liquidity.
• The interaction between two safe contracts can create unsafe behavior. Audit compositions.
• Start with small amounts. Test with minimal value before scaling.
• Flash loan attacks can manipulate prices within a single transaction. Design for this.